Lowering cost the aim of labor import

The catering sector has applied to bring in thousands of waiters and chefs, but the government has so far approved just over 2,000.

A less-than-amusing aspect is that the sector cannot claim to be a winner of the Enhanced Supplementary Labour Scheme that the Executive Council endorsed in June last year to help overcome the difficulty in recruiting workers in anticipation of a post-Covid economic expansion.

As restaurants close one after another, it raises a new question: is the catering sector still suffering from a manpower shortage?

Hong Kong Federation of Restaurants and Related Trades president Simon Wong Ka-wo estimated that between 200 and 300 restaurants closed in the past month. The fear is that the number may continue to grow despite new restaurants being opened reportedly by mainland operators.

So how tight or excessive is the manpower situation in the sector right now? Perhaps there is no ready answer.

Since the labor scheme was enhanced, the various qualifying industries have applied to import more than 41,000 workers. Over 8,500 have been approved, including 20 mainland bus drivers recruited by Citybus.

Former chief executive Leung Chun-ying had a point when he queried how the enhanced labor scheme could increase the competitiveness of the city as employers are required to pay the foreign workers, mostly from the mainland, the median wages for similar skills in the city - but this will not help lower the running costs of a business.

His suggestion is to set the wages payable to imported workers somewhere between the median wages of the city and the mainland to narrow the gap.

Those are the key points of the argument, which offers a new perspective on an old issue.

While this surely merits further consideration, the latest development in Singapore also offers a different perspective.

Starting next year, the threshold for foreign workers seeking approval to work in Singapore will be raised to be higher than the median wages of the locals so that Singaporeans will find it easier to land a job.

Rather than lowering the cost of production, elevating the threshold is bound to have a knock-on effect leading to an increase in the local wages and, therefore, the cost of doing business in Singapore in general.

It appears Singapore is confident that, even by raising the wages, it can compete in quality and that businesses and customers, in return, will be willing to pay more for the quality.

But there is more than one way to achieve growth. Over the years, Hong Kong has been synonymous with quality. Being outstanding as a quality service provider is always an edge, allowing businesses to charge customers more.

That is why, for example, seeing a dentist can be expensive in Hong Kong due to people's confidence in the quality they provide. But, as the quality gap between Hong Kong and Shenzhen narrows, this has ceased to be an advantage for the city.

Unless Hong Kong can create new value for itself, it can only compete by slashing the price.